Bolstad

The basic question presented on this appeal is whether the probate court correctly decided that the federal estate and state inheritance taxes were entirely payable from the probate estate of the testatrix or should have been prorated over her entire taxable estate.

The problem arises under the following state of facts. The decedent, Laura B. Armstrong, died testate on May 20, 1956, leaving her entire estate, appraised at $40,498, to appellant Roy E. Bolstad and his wife. The legatees were unrelated to the testatrix. Her sole heirs at law were two nieces, Dorothy Ashley, respondent, and Helene Quigley. The two nieces received nothing under the will, but they received $198,215 under the terms of an inter vivos trust which, prior to her death, and the death of her husband, had been created for the benefit of the nieces. Mrs. Armstrong had retained the right to revoke this trust, so that, at the time of her death, the assets of the trust became taxable as part of her taxable estate. The federal estate and California inheritance taxes on the entire taxable estate, including the assets of the trust, exceeded the value of the distributable probate estate. The probate court held that…